Prosper Australia

photo credit: mdumlao98

Prime Minister Rudd’s $10bn ‘economic security strategy’ is another blinkered response. A decade of record economic growth has done little for the aussie battler. Record prices for iron ore have cascaded into the deepest pockets in the nation, where hard working miners pay thousands of dollars in rent, soaking up much of the gains. David Ricardo’s ‘Law of Rent’ will always see economic growth benefit land owners disproportionately to hard working individuals.

The announcement of the First Home Owner Grants pt2 (FHOG) is simply shocking. Yet again the property lobby is being propped up. Just when prospective buyers were hoping land prices would fall, the ALP gives another handout to those who already own a piece of this precious earth.

This will ensure the recession is deeper and longer than feared because the cause of the world financial meltdown, the land price bubble, has been given a helping hand again!

If everyone receives $14,000 then land prices go up $14,000 at least. In 2001, when the scheme was first announced, land and housing prices jumped $32,000.

The result will see a new and enhanced wealth gap. Younger generations will again be left paying record rents, already more than twice what any other generation has paid. Julia Gillard’s ‘War on Poverty’ (announced January 08) has become just that in namesake.

Today we hear of the need for Breakfast Clubs in schools. Now that rents will be maintained at sky high levels, less money will be available for food and other necessities. One wonders whether the credibility of politician’s will reach a record low in the current climate.

by Karl Fitzgerald

as published in Arena Magazine, Feb-March, 2008, Edition 93

In a period where the twin crises of global warming and the wealth gap are attacking society from both sides, policy makers are continually limited in their effectiveness by a two dimensional approach to economics.

Land prices have increased at 4 times the rate of GDP and dwarfed wages growth by 1000 to 1 since WW2 (The Poverty Inquiry to end all Inquiries, Tony O’Brien, Figure 1, p5) . Such damning statistics beckon the ALP to take a hard look at the economic fundamentals undermining union wage demands. For Julia Gillard’s ‘War on Poverty’ to be successful, policymakers must look outside the square.

2008 marks the half way point in our promise to halve world poverty with the Millennium Development Goal’s 2015 deadline. With the wealth gap accelerating in both Developed and Developing countries, a serious flaw is evident in modern economics.
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